Thoughts on business, entrepreneurship, and life from a Silicon Valley entrepreneur and writer.

Sunday, November 26, 2006

Dammit, Barack, I thought you were different

Democratic hopeful Barack Obama recently joined in the chorus of critics slamming Wal-Mart. It never ceases to amaze me that the political party that claims to be the friend of the poor panders to prejudices by attacking the nation's single-largest private employer which has also brought huge price savings to millions and millions of lower-income customer.

I can understand when folks like Barbara Ehrenreich employ insane troll logic, but I expect better of Mr. Obama, who holds degrees from Columbia andHarvard Law School, and should understand reasoning.

Let me bottom line this for them. Wal-Mart's net income is about 3.5% of sales. It's basically a very efficient conduit for funneling savings from suppliers to consumers. Mandate that the company increase what it pays its workers (who, by the way, aren't being forced to work there!), and Wal-Mart will have to either raise its prices or lower its already slim profit margins.

In other words, there is no magical supply of money that Wal-Mart has sitting around that the good Mr. Obama can appropriate for the underprivileged. Any money or benefits that get directed to its workers will end up coming from its (low-income) customers, or by appropriating that value from its shareholders.

In the first case, there is no net benefit to the poor. In the second case, the government is effectively taxing the shareholders.

If politicians want to give themselves the ability to appropriate private property and redistribute it as they see fit, that's fine, but let them at least have the honesty to do it openly.

Good point! As a solidly Democratic friend of mine points out, "Every time we run a Southern governor, we win the White House. Every time we run a Northern senator, we lose. Why can't we figure this out?"

I don't know enough about Barack Obama to comment, other than to say that prior to the 2000 election, most press outlets portrayed George W. Bush as a non-partisan pragmatist who relished working with the opposition.

Regardless of whether you support or oppose George W. Bush, everyone can agree that this initial reading on his character was dead wrong.